Activity Based Costing-MT Celestial Innovations Limited produces two items, Alpha (30,000 units) and Beta (10,000 units)....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Activity Based Costing-MT Celestial Innovations Limited produces two items, Alpha (30,000 units) and Beta (10,000 units). The total manufacturing overhead expenses amount to $1,200,000, allocated based on labor hours, with $960,000 assigned to Alpha and $240,000 to Beta. To address profitability concerns, the company conducted an analysis of overhead costs, categorizing them into two activities: Machine Operations ($700,000) and Finishing Activities ($500,000). The examination revealed that machine operations are linked to machine hours, with both products sharing the total 80,000 machine hours equally, while finishing activities are associated with assembly hours, with Alpha utilizing 40% of the total 30,000 assembly hours, and the remainder allocated to Beta. Required: (a) Compute the manufacturing overhead cost per unit allocated to both products using the conventional allocation method dependent on direct labor hours (b) Determine the manufacturing overhead cost per unit allocated to both products using the activity-based costing approach. (c) (d) Analyze the findings from sections (a) and (b) and make inferences. Outline the key factors characterizing modern industrial production and elucidate how Activity-Based Costing addresses challenges within this context. (6 marks) (6 marks) (4 marks) (4 marks) Total marks (20 marks) Activity Based Costing-MT Celestial Innovations Limited produces two items, Alpha (30,000 units) and Beta (10,000 units). The total manufacturing overhead expenses amount to $1,200,000, allocated based on labor hours, with $960,000 assigned to Alpha and $240,000 to Beta. To address profitability concerns, the company conducted an analysis of overhead costs, categorizing them into two activities: Machine Operations ($700,000) and Finishing Activities ($500,000). The examination revealed that machine operations are linked to machine hours, with both products sharing the total 80,000 machine hours equally, while finishing activities are associated with assembly hours, with Alpha utilizing 40% of the total 30,000 assembly hours, and the remainder allocated to Beta. Required: (a) Compute the manufacturing overhead cost per unit allocated to both products using the conventional allocation method dependent on direct labor hours (b) Determine the manufacturing overhead cost per unit allocated to both products using the activity-based costing approach. (c) (d) Analyze the findings from sections (a) and (b) and make inferences. Outline the key factors characterizing modern industrial production and elucidate how Activity-Based Costing addresses challenges within this context. (6 marks) (6 marks) (4 marks) (4 marks) Total marks (20 marks)
Expert Answer:
Answer rating: 100% (QA)
Celestial Innovations Limited ActivityBased Costing Analysis Part a Conventional Allocation based on Direct Labor Hours Total direct labor hours not p... View the full answer
Related Book For
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these finance questions
-
Because of the success of the new spicy sausages, Silvio\'s Sausage Factory has come up with another new line of sausages the impossible sausages. Silvio has already paid $75,000 for another...
-
List three specific parts of the Case Guide, Objectives and Strategy Section (See below) that you had the most difficulty understanding. Describe your current understanding of these parts. Provide...
-
Adams Manufacturing, Inc. manufactures cooling and heating coils for several different industries. It has two plants. Jewett City Plant (JCP) is an older, labor-intensive machine shop where skilled...
-
Consider a single-output, non-preemptive queueing system. It has three queues connected to the single output, and packets in the queues are handled based on a strict-priority order. The three queues...
-
A highway contractor is considering buying a new trench excavator that costs $250,000 and can dig a 3-foot-wide trench at the rate of 16 feet per hour. With the machine adequately maintained, its...
-
Think about the many products that we receive from China. What is your personal opinion about the quality of the products from China? What steps should the Chinese government take to ameliorate this...
-
Ifa balance to an account has a $10 million error could an auditor say it is a material error? Why or why not?
-
You have been engaged to audit the financial statements of Quinn Corporation for the year ended December 31, 2010.During the year Quinn obtained a long-term loan from a local bank. The finance terms...
-
If f(x) = 6x2 - x3, find f'(1) and use it to find an equation of the tangent line to the curve y = 6x2 - x3 at the point (1, 5). Need Help? Read It Watch It
-
1. What problems might have contributed to the firms poor performance? 2. Although several problems were encountered in implementing the business plan, the primary reason for low profits turned out...
-
An increase in cultural diversity through the wide dissemination and acceptance of various regional cultural symbols, including customs, ideas, and values, through multicultural exchanges is called
-
Janae Co is a U.S. firm conducting a financial plan for the next year. It has no foreign subsidiaries, but more than half of its sales are from exports. Its foreign cash inflows to be received from...
-
Problem 5: Determine the largest weight of the wedge that can be placed between the 8-lb cylinder and the wall without upsetting equilibrium. The coefficient of static friction at A and C is s 0.5...
-
1. What is the angular velocity in rad/s of a flywheel spinning at the rate of 4820 rev/min? 2. If a wheel spins at a rate of 625 rad/s, what is its angular velocity in rev/min? If we assume all 500...
-
Except in cases such as natural monopolies, our economy thrives on competition. Legislation such as the Clayton Act regulate behaviors to ensure that competition gets a fair opportunity. We see...
-
Two boxes, A and B, are stacked on top of each other on top of a conveyor belt as shown below. The values of the coefficients of friction between the two boxes are k = 0.1 and =0.2. The values of the...
-
Following his recent loss at the U.S. elections, former President Trump has had to return to work. He has decided to open a travel agency, and has asked you to be his intern. He would like you to...
-
When the concentration of a strong acid is not substantially higher than 1.0 10-7 M, the ionization of water must be taken into account in the calculation of the solution's pH. (a) Derive an...
-
What is job-order costing?
-
How do you compute the cost of goods manufactured?
-
Why should companies link their balanced scorecard measures to their employee reward systems?
-
Inferring Values by Using the Statement of Earnings and Statement of Financial Position Equations LO1-1 Review the chapter explanations of the statement of earnings and the statement of financial...
-
Jerrys Taxis Ltd operates a taxi service in a large provincial city. All of the taxis are owned by the business and all the drivers are employees rather than owner drivers. The managers wish to...
-
Preparing a Statement of Earnings and a Statement of Financial Position LO1-1 Ducharme Corporation was organized by five individuals on January 1, 2020. At the end of January 2020, the following...
Study smarter with the SolutionInn App